Current Issues in the Analysis of Commercial Real Estate

This paper identifies and discusses a number of current issues regarding our understanding of commercial real estate markets. These issues include: 1) accurate estimation of the quantity and location of our nation's commercial space; 2) an understanding of the linkage between the space and capital markets for commercial real estate; 3) identification of the macroeconomic factors that affect the rate of return on commercial property and whether local market factors also affect the rate of return; 4) problems associated with measuring the return characteristics of equity investments in commercial property (including measures of the diversification benefits and inflation-hedging abilities of this asset class); 5) a better understanding of rental markets, including good measures of changes in effective rents over time; and 6) examination of the rationale for ownership of commercial space by corporate users. This paper reviews recent research related to these questions and suggests future research that should prove to be fruitful.     

Towards a complete real-time electricity market design

The general design for the real-time electricity market presented in this paper optimizes and prices both real and reactive power simultaneously in an AC setting, where all assets—generation, load and transmission—are allowed to bid and are financially settled at the locational price times energy consumed or produced. The result is that transmission lines are compensated for both capacity and admittance, providing incentives for efficient operation of transmission-related assets such as FACTS devices, if price-taking behavior is assumed. Losses are incorporated into the design and become an operating cost for transmission. The market design is shown to be revenue neutral and, under some assumptions, nonconfiscatory.      

Controlling for the Impact of Variable Liquidity in Commercial Real Estate Price Indices

Liquidity in private asset markets is notoriously variable over time. Therefore, indices of changes in market value that are based on asset transaction prices will systematically reflect intertemporal differences in the ease of selling a property. We define and develop a concept of "constant-liquidity value" in the context of a model that is characterized by pro-cyclical volume of trading. We then present an econometric model that allows for estimation of both a standard transaction-based price index and a constant-liquidity index. Our application to the NCREIF database reveals that, in the case of institutional commercial real estate investment, constant-liquidity values tend to lead transaction-based and appraisal-based indices in time, and also to display greater volatility and cycle amplitude. The differences can be significant for strategic investment policy viewed from a mean-variance portfolio optimization perspective.     

Entrepreneurial Hustle: Navigating Uncertainty and Enrolling Venture Stakeholders through Urgent and Unorthodox Action

Entrepreneurs need to act under conditions of uncertainty and resource constraints to bring new, often-unrecognizable products to market and convince an unknown set of stakeholders to support their endeavours. The type of action entrepreneurs take to navigate uncertain entrepreneurial contexts is underspecified. We analysed 48 interviews with entrepreneurs to inductively identify an action-oriented construct we labelled as entrepreneurial hustle – an entrepreneur’s urgent, unorthodox actions that are intended to be useful in addressing immediate challenges and opportunities under conditions of uncertainty. In a follow-up study, we use an experimental vignette approach to assess the impact of an entrepreneur’s hustle on venture stakeholders. Findings suggest that entrepreneurial hustle positively influences stakeholder perceptions of the entrepreneur’s leadership effectiveness and a venture’s legitimacy, mediated by perceptions of the entrepreneur’s ability-based trustworthiness. We conclude that entrepreneurial hustle is a fundamental behaviour that enables entrepreneurs to enrol new venture stakeholders and lead their entrepreneurial efforts.     

The service triangle and power: the role of frontline home support workers and consumer‐directed care—an Australian context

Workplace relational dynamics change when the customer or client takes on greater power in the relationship. Adopting a typology of the service triangle, this qualitative study examines frontline home support workers' perceptions of their power, following recent legislative change from a traditional agency‐directed aged care model to consumer‐directed care.     

Intertemporal Budget Policies and Macroeconomic Adjustment in Indebted Open Economies

This paper analyzes the role of government intertemporal budget policies in a growing open economy including nominal assets in the presence of an upward sloping supply of debt. This introduces transitional dynamics that influence the effects of government policy instruments on economic growth and the long term fiscal liability. It is shown that capital income taxes or a combination of tax‐cum‐expenditure or government expenditure alone can balance the long term intertemporal government budget constraint. However, those results are shown to depend critically upon the extent of distortion in capital flows brought about the upward sloping supply of debt.     

Econometric Methods for Modelling Systems With a Mixture of i(1) and i(0) Variables

This paper considers structural models with both I(1) and I(0) variables. The structural shocks associated with either set of variables could be permanent or transitory. We classify the shocks as (P1,P0) and (T1,T0), where P/T distinguishes permanent/transitory, while 1/0 means they are attached to structural equations with either I(1) or I(0) variables as their ‘dependent’ variable. We show that P0 shocks can affect cointegration analysis and provide a formula to compute the permanent component if they are present. Finally, we reformulate a well‐known empirical structural vector autoregression showing the impact of P0 shocks when there are just long‐run parametric and sign restrictions. Copyright © 2015 John Wiley & Sons, Ltd.